NDLI: Testing exclusion restrictions and additive separability in sample selection models

Content Provider	Springer Nature Link
Author	Huber, Martin Mellace, Giovanni
Copyright Year	2013
Abstract	Standard sample selection models with non-randomly censored outcomes assume (i) an exclusion restriction (i.e., a variable affecting selection, but not the outcome) and (ii) additive separability of the errors in the selection process. This paper proposes tests for the joint satisfaction of these assumptions by applying the approach of Huber and Mellace (Testing instrument validity for LATE identification based on inequality moment constraints, 2011) (for testing instrument validity under treatment endogeneity) to the sample selection framework. We show that the exclusion restriction and additive separability imply two testable inequality constraints that come from both point identifying and bounding the outcome distribution of the subpopulation that is always selected/observed. We apply the tests to two variables for which the exclusion restriction is frequently invoked in female wage regressions: non-wife/husband’s income and the number of (young) children. Considering eight empirical applications, our results suggest that the identifying assumptions are likely violated for the former variable, but cannot be refuted for the latter on statistical grounds.
Starting Page	75
Ending Page	92
Page Count	18
File Format	PDF
ISSN	03777332
Journal	Empirical Economics
Volume Number	47
Issue Number	1
e-ISSN	14358921
Language	English
Publisher	Springer Berlin Heidelberg
Publisher Date	2013-09-14
Publisher Place	Berlin, Heidelberg
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Sample selection Exclusion restriction Additive separability Monotonicity Test Econometrics Statistics for Business/Economics/Mathematical Finance/Insurance Economic Theory
Content Type	Text
Resource Type	Article
Subject	Statistics and Probability Social Sciences Economics and Econometrics

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